News

July 04, 2009

That Was The Week That Was ... In Australia

By Our Man in Oz

Minews. Good morning Australia. Another flat week, it seems.

Oz. It looks that way, but really it was a repeat of last week. Three down days and two up, resulting in a 2.6 per cent fall in the metals index on the ASX and a 1.8 per cent fall in the all ordinaries. As with last week, that picture of a market drifting lower only told part of the story. As you dig into the different sectors of the market you find bright spots to lighten the gloom. The gold sector produced a couple of very solid winners in Avoca (AVO) and Norseman (NGX). Iron ore had two stand-out winners in Sphere Investments (SPH) and Emergent Resources (EMG), and even the lacklustre base metals sector produced a winner, one which we drawn attention to several times in the past as a seriously under-valued stock, Hillgrove Resources (HGO).

It must be two years ago that Minesite first noted the gap between Hillgrove’s share price and the value of its minority stake in a coal-seam methane explorer, Eastern Star Gas. Well, that gap was partially plugged on Friday when Hillgrove sold its 19.9 per cent stake in Eastern Star to the big Australian petroleum company Santos, for A$176 million. At the time of the transaction, Hillgrove was trading at A17 cents, which valued the entire company at A$70 million. Naturally, when the sale was...